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» Deed in Lieu of Foreclosure in Virginia: A 2018 Update

Deed in Lieu of Foreclosure in Virginia: A 2018 Update

March 23, 2018 by Christopher Brown, Esq.

homeowner signing a deed in lieu of foreclosureNo one wants a foreclosure, that much is a fact. Not only can it damage your credit score, you are essentially left without a home with no one wanting to help you relocate to somewhere else. However, there are ways to bypass a foreclosure should the possibility make itself known. One of these ways is getting a deed in lieu of foreclosure, which will not damage your credit score as much and will still give you help should you want to move to somewhere else. But what is it exactly? What are the benefits to it? The disadvantages? What are you supposed to do when you go for a deed in lieu of foreclosure? Here, we talk about what a deed in lieu of foreclosure means to you and how to handle such an arrangement.

What is a Deed in Lieu of Foreclosure?

A deed in lieu of foreclosure is when the person in debt discusses with the lender at length about giving them back the property without facing foreclosure itself. They are excused from all debts associated with the mortgage through this method and continue to have some benefits when it comes to looking for other houses, as well as not lower the credit score as much than if it were foreclosed. For the lender, this means they can get the house back without the foreclosure auction, which can give less profit than a deed in lieu of foreclosure. In a deed in lieu foreclosure, it is important to note that both parties must be willing and able to transfer the house to the lender. As this has to be voluntary, deed in lieus need to be recorded so that it is certain that no one is being forced in this engagement.

Advantages

Deed in lieus can be very beneficial to both the person in debt and the lender. For one, despite having foreclosure in its name, a deed in lieu of foreclosure is far less damaging than a normal foreclosure when it comes to reputation and credit score. Not only that, but it is a less expensive option for both parties, allowing the person in debt to be completely free of the debt while the lender can make a profit when they try to sell the house. For the person in debt, they can possibly have their expenses paid by the lender, though the amount will be less than what a third party would pay. As for the lender, the property will not go to the bankruptcy court should the person in debt file a bankruptcy. While a deed in lieu of foreclosure may seem like an ideal solution, it may not be as beneficial as one would hope it to be.

Disadvantages

On the other hand, there are certain disadvantages to having a deed in lieu of foreclosure. For the person in debt, they will lose rights to owning the property and they can still be taxed due to it. For the lender, there are more consequences to worry about. When they are given the property, there may be some damages to it that they themselves have to fix now that they own it. For another, they will be unable to get rid of any subordinate liens that the property comes with. They can also possibly face legal repercussions should the person in debt decided to sue, or if others suspect that the exchange was not made in good faith. In cases like these, it is better to have a foreclosure than a deed in lieu of foreclosure in order to maximize profits.

Contact Your Local Civil Litigation Attorney Today

homeowner shaking hands with a Northern VA civil litigation attorneyIf you are having issues with a deed in lieu of foreclosure, it is best to contact a civil litigation attorney to help sort things out. A civil litigation attorney knows exactly how the process of a deed in lieu of foreclosure works and is able to help guide you through that process. A civil litigation attorney is also there to determine if a deed in lieu of foreclosure meeting was fraudulent and thus can be sued against. They outline the benefits and disadvantages of a deed in lieu to you, as well as recommend other options should it not be right for you. If you are having trouble with a deed in lieu of foreclosure, contact your nearest civil litigation attorney today. You will be able to leave the agreement completely satisfied and without too much hassle.

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